THE POUND jumped today after Michel Barnier suggested a Brexit deal between Britain in the EU could be signed within eight weeks.

Striking an optimistic note, the EU's chief Brexit negotiator said concluding an agreement on a future partnership between the UK and the bloc by the start of November was both "realistic" and "possible".

His remarks followed reports that the EU is poised to revise his instructions in the negotiations to allow more leeway to come to a compromise with Theresa May.

Sterling rose by around one per cent against the US dollar and half a percent against the euro after he spoke.

But the Prime Minister was also warned that any draft deal based on her so-called "Chequers" proposal could trigger a "catastrophic split" in Tory ranks.

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Mr Barnier delivered his latest assessment of the chances of a deal during a question-and-answer session at a conference in Bled, Slovenia.

"I think that if we are realistic we are able to reach an agreement on the first stage of the negotiation, which is the Brexit treaty, within 6 or 8 weeks," the veteran EU diplomat said.

"Taking into account the time necessary for the ratification process, the House of Commons on one side, the European Parliament and the Council on the other side, we must reach an agreement before the beginning of November. I think it is possible," he added.

Following his remarks, Downing Street acknowledged that there had been a welcome acceleration in the pace of the Brexit negotiations over the summer.

The pound jumped after Michel Barnier suggested a Brexit deal could be signed within eight weeks (Image: GETTY)

"We've said ourselves that we are focused on securing a deal in October and that continues to be what we're working towards," the Prime Minister's spokesman said.

"We've had positive engagement over the summer with EU leaders in relation to the Chequers plan. That engagement obviously continues."

He added: "You've seen over the summer an intensification in the talks - that's something we've called for. You've seen progress continuing to be made in relation to that withdrawal agreement."

British and EU Diplomats hope an informal summit of EU leaders in Salzburg, Austria, next week could turn into a significant moment in the Brexit talks.

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Ambassadors of EU nations in Brussels are understood to have been told the gathering is likely to discuss giving Mr Barnier additional guidelines for his approach to the negotiations. One unidentified senior diplomat was quoted in the Financial Times newspaper as saying the new guidelines could “serve as a sort of mandate to do the deal.”

Mrs May is expected to heighten her warnings to Brussels of Britain’s readiness to walk away from the talks unless by holding a special Cabinet meeting on Thursday to further discuss preparations for the UK quitting the EU without a deal.

Senior ministers are expected to spend around three hours discussing contingency plans needed in case the Brussels talks collapse.

Around 30 technical notes outlining the possible consequences of a no-deal Brexit for households and business are also set to be released on the same day.

It follows an earlier batch of documents released by EU Exit Secretary Dominic Raab last month.

Despite the encouraging tone from Brussels, opposition to the Prime Minister's Brexit blueprint agreed at her Chequers country retreat last month appeared to be growing.

The number of Tories backing the "Stand Up For Brexit" campaign calling for her to "chuck Chequers" had risen to 25 yesterday after a flurry of new signatures over the weekend.

Former Brexit minister Steve Baker, a supporter of the campaign, warned the Tories could be torn apart if Mrs May presses ahead with the plan.

Steve Baker warned the Tories could be torn apart if Mrs May presses ahead with the plan (Image: PARLIAMENT UK)

He feared the Conservative conference in Birmingham at the end of the month could witness an angry from the party grassroots.

Many local activists were concerned about suggestions the Prime Minister is hoping to force her proposals through the Commons with the support of pro-Brussels Labour MPs.

"If we come out of conference with her hoping to get Chequers through on the back of Labour votes, I think the EU negotiators would probably understand that if that were done, the Tory party would suffer the catastrophic split which thus far we have managed to avoid," he said.

Justice Secretary David Gauke said "an overwhelming majority within the Conservative Party" backed the Government's approach.

Opposition to Mrs May's Brexit blueprint appeared to be growing (Image: GETTY)

"I think that it is absolutely right that the Cabinet and the parliamentary party backs the Prime Minister.

"In challenging circumstances she is the right person to deliver the right deal for this country."

The Prime Minister's spokesman said that critics of the Chequers plan had yet to come forward with a credible alternative which would avoid the return of a hard border between Northern Ireland and the Republic.

"Chequers is the only plan on the table which will deliver on the will of the British people while avoiding a hard border in Northern Ireland," the spokesman said.

"The Prime Minister is working hard to secure a deal and hopes all MPs will be able to support it."